Forget the P/E ratio for past earnings, what matters is P/E ratio for future earnings. Amazon has invested a lot of money during the last 2 years establishing the Kindle reader and tablet range, thus making little profit. But the market considers that to be temporary and thinks they will rake in big profits from those investments soon. Apple is exactly the opposite. They have made lots and lots of profits in the past --- put have shown no clear plan going forward.

They will be spending less, they sold at or below cost when they introduced the new devices. By now component prices have dropped so that they will start making money on the hardware. And they probably won't have new devices in the first 6 to 9 months of 2013.

They will be spending less, they sold at or below cost when they introduced the new devices. By now component prices have dropped so that they will start making money on the hardware. And they probably won't have new devices in the first 6 to 9 months of 2013.

I disagree that they need to start making (more) on the sale of Kindles. Those are designed to work as a storefront for the Amazon ecosystem. But unlike Apple, it is not such a closed market - you can get Kindle apps on multiple non-Amazon platforms. They also got the content to sell along with the Kindles.

They will be spending less, they sold at or below cost when they introduced the new devices. By now component prices have dropped so that they will start making money on the hardware. And they probably won't have new devices in the first 6 to 9 months of 2013.

Did you see the other thread about Amazon buying Ivona? Looks like Amazon is still spending money on devices.

By far the vast majority of Amazon's spending over the past two years (literally billions) has been in infrastructure, which are capital assets, not in R&D or specific product development.
The expectation is that the new infrastructure will result in both reduced (warehousing, handling, and shipping) costs and greater sales.

Amazon has been spending on increasing its ability to sell and move product rather than on specific products that need to be sold to the public. Big difference.

Skittish investors sent Apple stock down 12 percent Thursday, one day after the computer giant’s quarterly revenue came in below estimates, and some analysts worried that weaker demand for its products was an indication that the company’s innovative prowess died with former CEO Steve Jobs.

In any other context, the idea of punishing a company that delivered an 18 percent year-over-year increase, bringing quarterly revenue to $54.5 billion, would be absurd, but Apple, in a way, is a victim of its own success. Investors now expect the company to come in and reinvent entire practices and product categories, as it did with listening to music and cell phones, and they expect the next candidate for an iMakeover to be the television.

Quote:

The TV industry doesn’t necessarily need — or want — Apple, though. “The difficulty is that the vast majority of TV content is owned by a small handful of companies who’s primary business model is bundling and cable [and] satellite distribution,” Andy Hargreaves, an analyst at Pacific Crest Securities, said via email. “Those companies have little interest in contributing content to a service that could disrupt their primary business model.”

When Apple reinvented the way we listen to music, it presented the ailing record industry with a solution to flagging sales and rampant piracy. When it turned the smartphone from an executive tool to a go-everywhere gadget, mobile carriers came around to the realization that they could create a whole new revenue stream by selling data plans to casual users.

Today, Americans have more choice than ever when it comes to their TV-viewing habits: They can digitally record a show to watch later, access streaming content from sources like Hulu or Netflix, get premium sports or movie content via subscriptions stacked onto their cable bundle and so on.

Quote:

Munster thinks Apple plans to go beyond the set-top box. “Our feeling is, and we feel strongly about this, is that it’s an actual television... given Apple’s DNA of design as a feature, plus the only way to truly fix the remote control problem is to put it all in one panel,” he said.

Trip Chowdhry, managing director of equity research at Global Equities Research, suggested Apple could make use of new display technology to develop TVs with “ultra” or “4HD” high-definition resolution.

The problem with the whole Apple HDTV scenario the analysts are hung up on is that it won't work today. Not in any way that would generate Apple-like profit margins.

The stuff the analysts vaguely conjure with their arm waving exists and it has a name; IPTV. Sony is working on it. So is Microsoft. So are others.

They are all stuck at the same spot: all the networks are too beholden to the cablecos and satcasters to rock the roat by allowing an alternative. Worse, they see IPTV as a backdoor to a-la-carte pricing for channels which means the death of many of the 500 channels on cable which are funded on availability not viewership. So XBOX LIVE DIAMOND and Sony's (unnamed?) Playstation service both exist only as ongoing projects until either or both can convince broadcasters to sign on.

The fancy TV features they dream of? TVs that understand English? Recognize you face and gestures? It already exists. Has for years. Works well, too. XBOX Kinect does it. So will the NextBox. Probably the PS4, too. More, Samsung and LG are halfway there and getting closer.

UltraHD TVs?
They're coming.
They'll be significant as limited high-end products at 70inches and bigger by 2015 or so.
Today? Expensive demos that sell by the hundreds. There is no content; not broadcast and not on disk. Their best feature is they can do passive 3D at fullHD resolution. And they can interpolate FullHD to make it a bit sharper. For US$8,000-30,000. Have I mentioned they're selling by the hundreds...?

Currently HDTVs is a business nobody makes money at because everybody makes comparable products. Home Theater/golden eyeball types go for Plasma or projectors, everybody else goes for the biggest LCD they can afford or fit in their viewing room. At the cheapest price they can find. At the smaller sizes they are interchangeable commodities and even the biggest sizes are affordable. Plus the things last. Big TVs are generally 5-10 year purchases, not 18 month buys that can be replaced every year or so. Oh, and pricing is so low, on even the bes displays, nobody is making money and everybody is throwing darts hoping to find a feature people will pay a premium for. So far, nothing is working; not 3D, not Internet connectivity. Most smart TV apps go unused. TVs are for passive viewing or gaming. And gaming is very very well covered. There is no shortage of innovation in the living room. Whate there is is a shortage of profits for anybody not named Microsoft, Sony, or Roku.

The reason Apple isn't doing an HDTV or doing much with their set-top box is that the time isn't right for them.
They need to wait for Microsoft or Sony or Samsung to scout out the terrain so the can figure out the "something" they can offer that will let them take over, like they did with MP3 players. But if they come out today they will get their heads handed to them. Because Microsoft and Sony are already out there with tens of millions of boxes, technology that works, and tens of millions of customers *already* committed to their ecosystems.

With an entirely new generation of hardware due this year.

The absolute earliest Apple could possibly make a reasonable play for the living room is late 2014 and 2015 is more likely. First they need for the existing *strong* players to show their hand and then they'll know if they can play the game. Because HDTV in 2013 isn't MP3s in 2001-2002; they won't be going against obscure startups. They'd be taking on the big names of the consumer electronics world, some of which are fighting for their lives.

If Apple panics and gives the analysts what they want *that* will be a sign of a broken company. They can continue to grow their business in 2013 the way they did in 2012: with incremental tweaks and reaching to new markets with the same products.

But staying out of the living room is just a sign of prudence and good management.

I agree the idea of consolidated IPTV is difficult. That's why it hasn't been done. Who has any sliver of a chance to get it done? Apple, Amazon, maybe a couple of others (Sony? As if they'd be trusted as a central agency).

When that article says, "They can digitally record a show to watch later, access streaming content from sources like Hulu or Netflix, get premium sports or movie content via subscriptions stacked onto their cable bundle and so on. " That is exactly the opportunity. It is annoying to switch between multiple content providers -- Netflix, Hulu, Amazon, Redbox, CBS.com, my cable company, etcetera. Beyond switching the feeds, we don't get any consoldated listings and we can't easily set a DVR for the mixture.

I used the last generation smart TV's (as of a year ago). The use of apps is still not a unifying experience.

People seem to forget that the stock market, like any market, is made up of people. Their emotional whims result in fluctuations that some will consider rational and others will consider insane. What, you don't think Wall Street finds some of our valuations for startups utterly insane? This is why I adhere to the school of technical analysis when it comes to investing in the stock market.

Perhaps Apple, Facebook, and the tech community's roller coaster ride on Wall Street will result in more tech companies staying private instead of heading toward an eventual IPO. Mark Zuckerberg didn't want to have a Facebook IPO for these very reasons, and other companies are finding ways to delay an IPO.

What all the humbug about Apple's earnings tells me though is that Silicon Valley and Wall Street simply aren't on the same page. In fact, they aren't on the same planet. Wall Street is from Mars, Silicon Valley is from Venus.

Here's how I see it: all markets, big or small, are predictably irrational, because they are simply collections of irrational human beings. None of us is innocent or immune. Remember that before investing on Wall Street OR in a startup.

Note that DELL is looking to go private and Microsoft is chipping in to help it happen:

First of all a company posting around 50bln US$ in Profits for 2012 is not broken, Highst quarter earning ever posted by by non oil company , highst profit ever earned by no oil company, stronger groth on Smartphine and Tablet marked then idustrial average (means Apple has outperformed competitors)
But wall street are idiots. The only reason they did not reach the goal on Iphone sales was not aple to provide the phones a broken company "

Well, to be fair, the issue is content more than it is delivery. Apple could indeed create their own distribution network (they should buy Dish TV!). Heck, Google laid its own fiber in Kansas, right? Even simpler, pump everything over the internet, Netflix-style, and no new delivery system is required, just an additional data center or two, and a mo-better-box connected to my router (Apple TV on steroids).

But Apple would need to acquire content and that is where the whole deal gets tricky. If they get a narrow slice of content they won't gain traction.

Apple lost its title as the most valuable company in the world on Friday.

Apple's market cap plummeted below $420 billion on Friday after a disappointing earnings report earlier in the week, allowing Exxon Mobil to regain its title as the most valuable company by market cap.